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Thread: How best to consolidate CC debt ?

  1. #11
    Senior Member EarthSky's Avatar
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    Hello everyone. Thank you all for your wisdom, and sharing your experiences! I have been out of town for a family funeral in a rural area without access to internet, so could not respond sooner. Just returned home, and will share more info tomorrow!

  2. #12
    Senior Member The Storyteller's Avatar
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    I have to stick with my original comments. It is a rare person indeed in this culture who must choose between paying down debt and keeping a roof over their head. It is more likely choosing between cable or Internet or that diet coke and debt as opposed to essentials. Just make sure your needs (actual needs) and an emergency fund are taken care of as you pay down your debt.

    Every dollar you spend knocking off debt is one less dollar you have to pay exorbitant interest on.
    "There are too many books in the world to read in a single lifetime; you have to draw the line somewhere." --Diane Setterfield, The Thirteenth Tale

  3. #13
    Senior Member kib's Avatar
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    There's typically another nasty evil to consolidation and refinancing, although it might sound nice: the payment goes down. The payment goes down because the interest is lower, which is good, but it typically also goes down because the term is longer, which is not good at all. I have also known people who are credit card spenders who consolidate, and then feel that the $200 less in monthly payments means it's fine to incur yet another debt. Hey, now we can afford a snow mobile, the payments are only $200! nooooooooo.............

    Snowballing is actually kinda fun, because you get these satisfaction hits along the way, you can chart your debt and watch it go down, and the amount of money you have available to throw at the next card just keeps going up, so there's this linear reward.

  4. #14
    Senior Member kib's Avatar
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    Quote Originally Posted by The Storyteller View Post
    It is a rare person indeed in this culture who must choose between paying down debt and keeping a roof over their head.
    hmmm. Which culture is that, exactly? The one where everyone's employed and insured? I musta missed the exit. I find it's a rarer person who Isn't juggling debts, bills and mortgage payments, praying to keep all in the air.

    Every dollar you spend knocking off debt is one less dollar you have to pay exorbitant interest on. - now that one I wholeheartedly agree with, it's an excellent motto.

    With today's CC rates, you could almost say a penny paid is two pennies earned.
    Last edited by kib; 2-12-11 at 1:11am.

  5. #15
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    Double ditto to the last comments by The Storyteller and kib.

    Ed
    Totally Debt Free For Over Ten Years

  6. #16
    Senior Member Crystal's Avatar
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    I didn't take the 'bundle it' route. I paid off a couple of smaller ones first, and then took on the big one and threw everything at it -- GIANT charts on the wall and the whole nine yards. In 13 months, I paid off $18K in debt, which was clearly impossible on my salary. I still have no idea how I did it, except I think I annoyed many of my friends with my frugality and zeal during that time. The payoff was immense in terms of emotional and financial well being, though.

  7. #17
    Senior Member The Storyteller's Avatar
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    Quote Originally Posted by kib View Post
    hmmm. Which culture is that, exactly?
    The one where people tend to spend money on crap they don't need, generally regardless of income. Money that in this case would be better spent on paying down debt.
    "There are too many books in the world to read in a single lifetime; you have to draw the line somewhere." --Diane Setterfield, The Thirteenth Tale

  8. #18
    Senior Member EarthSky's Avatar
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    Hello all. Sorry I've been MIA. However, per your advice, I have read Dave Ramsey (the Q&A book and Financial Revisited) and now have the CD to listen to (all from the library . I like the snowball strategy lot, but think I also need the YMOYL 9 Steps - especially the visuals of the wall charts, and the re-thinking of the real worth of all the extra hours I've worked over the years. (Has anyone on the forum intentionally worked both approaches simultaneously?)

    Most of my debt is not from trivial spending on unnecessary things, but from major life events - divorce and child custody trial, cross-country move, major home repairs (roof, basement). I'm never been a big spender, but am re-reading Tightwad Gazette to get some renewed inspiration.

    I have a few months of severance, but no emergency fund, so am really taking to heart your advice on prioritizing financial needs (ensuring Food/Shelter/Lights/Clohtes) - and will not consolidate my CC debt in a way that is tied to the house!

    My related dilemmas (for other threads) are 1) what type of position to pursue (I've always done non-profit high-responsibility jobs that have been very demanding of time and emotional energy, and again, am trying to listen to the wisdom of YMOYL) and 2) helping the children understand the need to tighten the belt' even more.

    Thanks again for sharing your stories of struggle and success.

  9. #19
    Senior Member RosieTR's Avatar
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    I would recommend looking at your overall picture. Have you been tracking the last few months (since all the craziness settled down)? If not, can you at least estimate most expenses? Now, look at your biggest necessities: housing, transportation, bare-bones food, childcare, health care, minimum debt payments. What percentage of your income is that (use unemployment or the pay rate of some job you could reasonably expect to get)? If it's more than 70%, you have to think long and hard about whether your basic expenses are unsustainable. If that is the case, definitely check out Consumer Credit Counseling-make sure it's accredited/legit and not some company that promises to consolidate, improve credit scores, or anything else that sounds fishy because fish get stinky real fast. If it's not, hang in there til you get a job then follow debt snowballing. Any of these can be used in conjunction with YMOYL. One of the most helpful is to track all your spending and when you get a job offer, calculate your real hourly wage. It will help make things very clear in terms of spending priorities.
    As for what to tell the kids...try googling stuff on making hard times into teachable moments. Depending on age, they can start learning about budgets, tracking spending, making intelligent money choices and so forth. If you can involve them in a way that makes things fun it will be less stressful for both of you and may be a great topic for a whole thread.

  10. #20
    Senior Member EarthSky's Avatar
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    Great advice, and good timing since I'm looking at all my recurring bills right now - thanks!!

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